Brits Wake Up! Pound To Drop 40% Against Euro?

[chownah]

Harmonica,  In the original post you predicted the Pound would drop 40% relative to the Euro and that the Pound would stay constant against the Dollar.  Are you then predicting that the Dollar will drop 40% against the Euro?  If not then please explain how this can happen.

Chownah

<{POST_SNAPBACK}>

Please re-read the original post, chownah.

I said quite clearly that "I do not have an opinion on this subject just yet"

So just to reiterate, I am going to collect data (started already) and express my own personal technical opinion about the veracity of such a claim sometime within the next several days.

The post to follow this one has some initial points that I have observed right off the bat!

<{POST_SNAPBACK}>

You are right. I did not read the original post carefully enough. So just to be sure my thinking is correct I'll rephrase my question:

Harmonica, In the original post they predicted the Pound would drop 40% relative to the Euro and that the Pound would stay constant against the Dollar. Are they then predicting that the Dollar will drop 40% against the Euro? If not then please explain how this could happen.

Thanks for your patience,

Chownah

Edited July 17, 2005 by chownah

[chownah]

the queen might jump out of one of those bills and bite your fingers

55555555555

to Harmonica:

if there should be a drop, I don't believe it will be that drastic, and a change against one currency does not necessarily imply a similar one against another.

take the recent drop of the euro against the $, but almost no change aginst the baht for exemple.

<{POST_SNAPBACK}>

yeah chico, that is what I believe. Thanks.

<{POST_SNAPBACK}>

But then what did really happen? Isn't it the $ which rose against the Euro and Baht (and other currencies as well)?

<{POST_SNAPBACK}>

Yes the $ did rise versus both the Euro and the Baht -- that is easily seen with the $ as pivot -- however what about the Euro vs Baht? With the Euro as pivot, things could look considerably different. That is what chico is referring to, I believe.

One thing I have determined is that it is folly to assume that just because one pair is behaving in a particular manner, that a corresponding pair will therefore behave in an arithmetically inductive way.

<{POST_SNAPBACK}>

I'm interested in your assertion that, "One thing I have determined is that it is folly to assume that just because one pair is behaving in a particular manner, that a corresponding pair will therefore behave in an arithmetically inductive way."

My thoughts on this. If you observe any three currencies and compare how they move against each other they should move in an approximately arithmetically inductive way. (Aside:I have a degree in mathematics so to me the term 'arithmetically inductive' probably has a different group of meanings associated with it than the meanings you have....but I think I understand your meaning here.) If they do not then some currency trader can go around in a circle trading currencies and makeing money on each round. Now, I know that this does happen...that's why I said "approximately arithmetically inductive." (Another aside:When currency traders make these rounds and take profits, their actions tend to move the exchange rates toward perfect correspondance.) There is money to be made by going on these trading rounds so long as the "margins of error" withing the triangle are larger than the cost of trading. I think that in this day and age of global information swapping at near instantaneous speed the "margins of error" will be quite small...but I have no experience with this directly...for me this is all from my understanding of mathematics and global communications. It sounds as if you have some direct experience in comparing these sorts of things. Can you give me examples of where you noticed these "margins of error" and what their approximate magnitude were? Or maybe I'm completely off the mark here and am misunderstanding your post entirely.

[Harmonica]

Harmonica,  In the original post you predicted the Pound would drop 40% relative to the Euro and that the Pound would stay constant against the Dollar.  Are you then predicting that the Dollar will drop 40% against the Euro?  If not then please explain how this can happen.

Chownah

Please re-read the original post, chownah.

I said quite clearly that "I do not have an opinion on this subject just yet"

So just to reiterate, I am going to collect data (started already) and express my own personal technical opinion about the veracity of such a claim sometime within the next several days.

The post to follow this one has some initial points that I have observed right off the bat!

You are right. I did not read the original post carefully enough. So just to be sure my thinking is correct I'll rephrase my question:

Harmonica, In the original post they predicted the Pound would drop 40% relative to the Euro and that the Pound would stay constant against the Dollar. Are they then predicting that the Dollar will drop 40% against the Euro? If not then please explain how this could happen.

Thanks for your patience,

Chownah

Yes chownah, THEY are predicting that the Pound will drop 40% relative to the Euro -- and that they do NOT expect this to impact the Pound/Dollar relationship. That is the word and it was said by THEM !

They have NOT said that the Dollar will drop 40% relative to the Euro!

The above statement (Dollar will drop 40% relative to Euro) was made by one or more participants in this thread. It was NOT made by me!

This is where the "arithmetically inductive" reasoning I talked about comes into play. I am stating that it is wrong to assume that a corresponding change will occur in any of the 3 pairs just because of a change in one and no change in the second pair for a number of reasons -- one being that there is always a change taking place within a pair because each pair has its own unique wave pattern and even though the graph might be going horizontally, there is still change taking place.

The 3 currencies Euro, Pound and dollar form 3 pairs altogether.

Euro/Dollar ..... Euro/Pound .... Pound/Dollar

I have seen colossal mistakes made in the calls of an expert a couple years ago (don't recall the exact details) and it was due to a similar arithmetic reasoning.

Instead of doing things his way, I prefer to treat each pair as a completely separate entity and NOT try to extrapolate casually.

Each pair is unique.

I don't know if I'm making any sense -- its still the weekend. If necessary I can try to re-express myself tomorrow.

As of now I still do not have any prediction on the Pound vs Euro. Sometime next week I should be able to come up with a sensible analysis.

One way or another we will be prepared for the move well before it occurs -- that is the intention anyway.

[Harmonica]

Why G?  Your reasons for the addition of ILS?  We are talking long-term here, right?

Pretty simple, I happen to be a citizen of that country!

And... would love to hear you opinion about it, vs USD or EUR, for example.

G,

Reuters DataLink does not offer ILS as a symbol. So we're out of luck there.

Yahoo Finance does have it but I'm having trouble downloading it -- the symbol shown is (YHO:USDILS=X) ...... I've tried various combos, without the brackets, without the X etc. -- no cigar.

Any ideas?

[The_Moog]

Who are these 'them' so cryptically referred to ?!

This is such a pratty topic - such a waste of time reading it, with everyone trying to sound clever and show off.

If Harmonica has no view, what are you all gassing on about?

Of course cross-exchange rates do not stand independent - forex arbitrageurs are all over disparities in crosses in Euro/$, Cable and Euro/Sterling.

You guys must spend hours and hours writing essays for these types of topics here !

Sorry, sorry, sorry - off to the Apology Topic for me (....still true nonetheless)

Edited July 17, 2005 by The_Moog

[chownah]

.........................

Of course cross-exchange rates do not stand independent - forex arbitrageurs are all over disparities in crosses.

<{POST_SNAPBACK}>

Harmonica seems to disagree with you on this point. I know very little about all this stuff but it seems obvious from a mathematical standpoint that if you know the exchange rate between and two pairs of a threesome of currencies then the third pair must be very close to its mathematical ideal or else someone will make alot of money quickly from this market blunder. He seems to be hypnotized by some periodic wave behavior he attributes to the individual pairings of currencies as if they were entirely seperate entities.

I'm trying to get a handle on how quickly and how perfectly the market reacts to shifts in currency exchange rates. It used to be that global communication was slower and the imperfections in the market were large enough that people could make good money swapping currencies daily....do you know is this still the case? I would imagine that it almost never happens anymore since computerized global communication should make the overall tuning of exchange rates almost perfect and almost instantaneous. As you can see my expectation of instantaneous perfection is unreasonable and probably comes from my mathematical side where such things do occur.....but I'm looking for the real world experience here.

[chownah]

Harmonica,  In the original post you predicted the Pound would drop 40% relative to the Euro and that the Pound would stay constant against the Dollar.  Are you then predicting that the Dollar will drop 40% against the Euro?  If not then please explain how this can happen.

Chownah

<{POST_SNAPBACK}>

Please re-read the original post, chownah.

I said quite clearly that "I do not have an opinion on this subject just yet"

So just to reiterate, I am going to collect data (started already) and express my own personal technical opinion about the veracity of such a claim sometime within the next several days.

The post to follow this one has some initial points that I have observed right off the bat!

<{POST_SNAPBACK}>

You are right. I did not read the original post carefully enough. So just to be sure my thinking is correct I'll rephrase my question:

Harmonica, In the original post they predicted the Pound would drop 40% relative to the Euro and that the Pound would stay constant against the Dollar. Are they then predicting that the Dollar will drop 40% against the Euro? If not then please explain how this could happen.

Thanks for your patience,

Chownah

<{POST_SNAPBACK}>

Yes chownah, THEY are predicting that the Pound will drop 40% relative to the Euro -- and that they do NOT expect this to impact the Pound/Dollar relationship. That is the word and it was said by THEM !

They have NOT said that the Dollar will drop 40% relative to the Euro!

The above statement (Dollar will drop 40% relative to Euro) was made by one or more participants in this thread. It was NOT made by me!

This is where the "arithmetically inductive" reasoning I talked about comes into play. I am stating that it is wrong to assume that a corresponding change will occur in any of the 3 pairs just because of a change in one and no change in the second pair for a number of reasons -- one being that there is always a change taking place within a pair because each pair has its own unique wave pattern and even though the graph might be going horizontally, there is still change taking place.

The 3 currencies Euro, Pound and dollar form 3 pairs altogether.

Euro/Dollar ..... Euro/Pound .... Pound/Dollar

I have seen colossal mistakes made in the calls of an expert a couple years ago (don't recall the exact details) and it was due to a similar arithmetic reasoning.

Instead of doing things his way, I prefer to treat each pair as a completely separate entity and NOT try to extrapolate casually.

Each pair is unique.

I don't know if I'm making any sense -- its still the weekend. If necessary I can try to re-express myself tomorrow.

<{POST_SNAPBACK}>

I made the statement suggesting that when they claim that the pound would drop 40% against the euro and the dollar would remain unchanged against the pound that this seemed to imply that the dollar would drop by 40% against the euro. It was my suggestion.....and....what I'm asking you is this: if the pound does drop by 40% against the euro and the pound doesn't change relative to the dollar do you think it is reasonable to assume that the dollar would drop by 40% against the euro?...or do you think it is possible that the dollar would end up any place significantly different than a 40% drop against the euro?

To boil this down....THEY made two predictions for exchange rates between 3 currencies; pound drops 40% vs. euro and pound does not change against the dollar. CHOWNAH suggests that this implies that the dollar would drop by almost exactly 40% against the euro. CHOWNAH would like HARMONICA to comment on whether CHOWNAH's suggestion is 1) correct, 2) possibly correct but with some small difference, 3) could be totally off base and the dollar/euro rate could be way different than a 40% drop in the dollar, 4)some other possibility that I've not mentioned. If your answer is 3) or 4) then I ask you to explain how this can occur and if possible give a real example or if a real example is not known then an imaginary one.

Thanks for your patience,

Chownah

[The_Moog]

Euro/$, Cable, Euro/Sterling ?

Those three?

...About one nanosecond of price gaps, before heavy arbitraging takes place.

Automatic computer programmes spot the differentials, humans don't even need to get out their calculators.

<< I had to break my Sunday silence for this >>

Edited July 17, 2005 by The_Moog

[Harmonica]

Euro/$,  Cable, Euro/Sterling ?

Those three?

...About one nanosecond of price gaps, before heavy arbitraging takes place.

Automatic computer programmes spot the differentials, humans don't even need to get out their calculators.

<< I had to break my Sunday silence for this >>

Moog, if you're going to wash your bum in public, at least do it with some humility, please?

I am NOT talking about arbitraging, never have and never will -- why? Because it is a whole different ballgame, one that is profitable to arbitrageurs, if it does not kill them first and I believe that furthermore in this day and age, discrepancies are quickly neutralized and seized. It is a market where swift action is required and is not conducive to the relatively relaxed lifestyle I desire.

What I am talking about is " pure" currency trading and/or the buying of a winning currency and holding for the entire medium-term rally-- wherein one studies pairs of currencies and does ratio analysis on the final 2 picks in order to pick the winner.

It is very simple, really, but some idiot will certainly come along and try to &lt;deleted&gt; up a simple strategy that has worked and continues to work.

Definition of arbitrage :

the purchase and sale of the same or equivalent securities in different markets in order to profit from price discrepancies.

(Etymology: French , from Middle French, arbitration)

Hope the argument is not because of the etymological origin?

[Harmonica]

If it helps anybody, he/she is welcome to it -- it is certainly helping me and 2 other people who read this board for clues about what to do currencywise when they retire.

Without further ado let's get to it.

I now have an opinion on the Euro vs British Pound scenario.

Before I state this opinion though I'd like to make it clear that it is an ongoing one, one that will develop as the days go by and further evidence is proffered by present time market action.

The strong liability thus far is the short history of the Euro.

But we've got to go with what we have!

I am in agreement with the THEY -- and who are the THEY? "They" are the well regarded British thinktank mentioned in the original post -- I don't know these fellows personally or even who the heck they are. In fact, going to the website mentioned in the op has not revealed to me yet who they are.

I'm just happy to have gotten in on the developing game, for by God there is something afoot; subterranean, yes, accumulation? .. yes, it does appear to be stealthy.

There is technical evidence that the rally in the Euro versus the British Pound that began in 2000 and has continued for 4.5 years, will continue!

I require several days or weeks for corroboration of this.

So let my statement then be just an initial evaluation.

To be continued ......

[Harmonica]

The uptrendline must hold and we must have a breakout thru' the red line for my argument thus far to be correct.

If the red line does not get vanquished and the uptrendline gets broken, then its back to the operating (drawing) table for brainstorming.

OK?

[~G~]

G,

Reuters DataLink does not offer ILS as a symbol.  So we're out of luck there.

Yahoo Finance does have it but I'm having trouble downloading it -- the symbol shown is (YHO:USDILS=X)  ...... I've tried various combos, without the brackets, without the X etc. -- no cigar.

Any ideas?

<{POST_SNAPBACK}>

Hmmm... I used to trade USD/ILS, EUR/ILS in www.easy-forex.com but they don't even supply real time graphs of ILS vs anything, just realtime rates, and no history whatsoever.

www.globes.co.il should have the info but only to registered users as it seems. I will try to dig up my password for that site (was using it long time ago) and see if it is of any good.

thanks for the effort though In any way - based on my limited knowledge of statistics, I believe tech. analysis can only work if the number of transactions/ deals/players is over a certain threshold, right? And should be more accurate as the volume increases.

What is this threshold and is it possible ILS vs other currencies is under it?

Edited July 18, 2005 by ~G~

[miminem]

I do not know if it is relevant but being in Korea, I get korean won, (1000won being almost a US dollar). When I get in Bangkok, if I change KRW, I get something around 32 baht for 1000 won, far from the 40 baht I would have expected .

How is it that when I am in Korea, I get 1usd for 1000 won but only 75% of a USD when i am in Thailand?

conclusion: I now change my KRW into USD in Korea then change the USD into baht when I stay in BKK. But Banks in thailand must get some profit out of this since they sell the 1000 won for 42 bahts .

[~G~]

I'm interested in your assertion that, "One thing I have determined is that it is folly to assume that just because one pair is behaving in  a particular manner, that a corresponding pair will therefore behave in an arithmetically  inductive way."

My thoughts on this.  If you observe any three currencies and compare how they move against each other they should move in an approximately arithmetically inductive way.  (Aside:I have a degree in mathematics so to me the term 'arithmetically inductive' probably has a different group of meanings associated with it than the meanings you have....but I think I understand your meaning here.)  If they do not then some currency trader can go around in a circle trading currencies and makeing money on each round.  Now, I know that this does happen...that's why I said "approximately arithmetically inductive." (Another aside:When currency traders make these rounds and take profits, their actions tend to move the exchange rates toward perfect correspondance.)  There is money to be made by going on these trading rounds so long as the "margins of error" withing the triangle are larger than the cost of trading. I think that in this day and age of global information swapping at near instantaneous speed the "margins of error" will be quite small...but I have no experience with this directly...for me this is all from my understanding of mathematics and global communications.  It sounds as if you have some direct experience in comparing these sorts of things.  Can you give me examples of where you noticed these "margins of error" and what their approximate magnitude were?  Or maybe I'm completely off the mark here and am misunderstanding your post entirely.

<{POST_SNAPBACK}>

Chownah:

(X & Y) => Z

X = GBP/EUR falls 40%

Y = USD/GBP not changing

Z = USD/EUR falls 40%

Whether this formula holds, this is beyond doubt.

But this is not the argument here - it is whether both X and Y can be both true. This is very strange - GBP/EUR falls 40% and that having no effect on USD/GBP will be quite unrealistic (some kind of effect, which is probably too difficult to infer)

Edited July 18, 2005 by ~G~

[chownah]

I do not know if it is relevant but being in Korea, I get korean won, (1000won being almost a US dollar). When I get in Bangkok, if I change KRW, I get something around 32 baht for 1000 won, far from the 40 baht I would have expected .

How is it that when I am in Korea, I get 1usd for 1000 won but only 75% of a USD when i am in Thailand?

conclusion: I now change my KRW into USD in Korea then change the USD into baht when I stay in BKK. But Banks in thailand must get some profit out of this since they sell the 1000 won for 42 bahts  .

<{POST_SNAPBACK}>

Consider this: Next time you come to Thailand convert 1,000,000 won extra into dollars, this gives you 1,000 dollars. In Thailand convert 1,000 dollars into baht, this gives you 40,000 baht. When you leave Thailand convert 40,000 baht into won, this gives you 1,250,000 won. YOU HAVE JUST MADE 250,000 WON PROFIT....HOOOOOOOOORAY.....

Unfortunatley, if your exchange rates are correct, then they do not reflect the international money market exchange rates....probably because the banks take a cut of various size depending on the currency (perhaps) and the size of the bills you exchange. This illustrates my point as to why when given three currencies and you know the exchange rates between two pairs of them then the third pair exchange rate must nearly follow a mathematically determined amount....if not then currency traders start trading and making money at the expense of one of the countries.....and this trading activity tends to change the exchange rate to match the mathematical rate....in my opinion...I'm not sure if Harmonica agrees or not.

[chownah]

I'm interested in your assertion that, "One thing I have determined is that it is folly to assume that just because one pair is behaving in  a particular manner, that a corresponding pair will therefore behave in an arithmetically  inductive way."

My thoughts on this.  If you observe any three currencies and compare how they move against each other they should move in an approximately arithmetically inductive way.  (Aside:I have a degree in mathematics so to me the term 'arithmetically inductive' probably has a different group of meanings associated with it than the meanings you have....but I think I understand your meaning here.)  If they do not then some currency trader can go around in a circle trading currencies and makeing money on each round.  Now, I know that this does happen...that's why I said "approximately arithmetically inductive." (Another aside:When currency traders make these rounds and take profits, their actions tend to move the exchange rates toward perfect correspondance.)  There is money to be made by going on these trading rounds so long as the "margins of error" withing the triangle are larger than the cost of trading. I think that in this day and age of global information swapping at near instantaneous speed the "margins of error" will be quite small...but I have no experience with this directly...for me this is all from my understanding of mathematics and global communications.  It sounds as if you have some direct experience in comparing these sorts of things.  Can you give me examples of where you noticed these "margins of error" and what their approximate magnitude were?  Or maybe I'm completely off the mark here and am misunderstanding your post entirely.

<{POST_SNAPBACK}>

Chownah:

(X & Y) => Z

X = GBP/EUR falls 40%

Y = USD/GBP not changing

Z = USD/EUR falls 40%

Whether this formula holds, this is beyond doubt.

But this is not the argument here - it is whether both X and Y can be both true. This is very strange - GBP/EUR falls 40% and that having no effect on USD/GBP will be quite unrealistic (some kind of effect, which is probably too difficult to infer)

<{POST_SNAPBACK}>

I wasn't sure that there was an argument here....I just made an observation and thought I detected a logical consequence of the predictions made by THEM. I was trying to determine if my idea was correct or not. I'm beginning to think my idea is correct but Harmonica still hasn't given me his take on it. Also, it seems to me that if THEY think its big new that the pound might drop 40% against the euro then I was thinking that if the US dollar dropped 40% against the euro that this news absolutely dwarfs the importance of the pounds situation since the US dollar figures so heavily in international finance and business. I'm still wondering what Harmonica thinks of this especially since he seems to disagree with my idea....but I'm not sure since he hasn't made a clear reply yet.

[~G~]

I'm interested in your assertion that, "One thing I have determined is that it is folly to assume that just because one pair is behaving in  a particular manner, that a corresponding pair will therefore behave in an arithmetically  inductive way."

My thoughts on this.  If you observe any three currencies and compare how they move against each other they should move in an approximately arithmetically inductive way.  (Aside:I have a degree in mathematics so to me the term 'arithmetically inductive' probably has a different group of meanings associated with it than the meanings you have....but I think I understand your meaning here.)  If they do not then some currency trader can go around in a circle trading currencies and makeing money on each round.  Now, I know that this does happen...that's why I said "approximately arithmetically inductive." (Another aside:When currency traders make these rounds and take profits, their actions tend to move the exchange rates toward perfect correspondance.)  There is money to be made by going on these trading rounds so long as the "margins of error" withing the triangle are larger than the cost of trading. I think that in this day and age of global information swapping at near instantaneous speed the "margins of error" will be quite small...but I have no experience with this directly...for me this is all from my understanding of mathematics and global communications.  It sounds as if you have some direct experience in comparing these sorts of things.  Can you give me examples of where you noticed these "margins of error" and what their approximate magnitude were?  Or maybe I'm completely off the mark here and am misunderstanding your post entirely.

<{POST_SNAPBACK}>

Chownah:

(X & Y) => Z

X = GBP/EUR falls 40%

Y = USD/GBP not changing

Z = USD/EUR falls 40%

Whether this formula holds, this is beyond doubt.

But this is not the argument here - it is whether both X and Y can be both true. This is very strange - GBP/EUR falls 40% and that having no effect on USD/GBP will be quite unrealistic (some kind of effect, which is probably too difficult to infer)

<{POST_SNAPBACK}>

I wasn't sure that there was an argument here....I just made an observation and thought I detected a logical consequence of the predictions made by THEM. I was trying to determine if my idea was correct or not. I'm beginning to think my idea is correct but Harmonica still hasn't given me his take on it. Also, it seems to me that if THEY think its big new that the pound might drop 40% against the euro then I was thinking that if the US dollar dropped 40% against the euro that this news absolutely dwarfs the importance of the pounds situation since the US dollar figures so heavily in international finance and business. I'm still wondering what Harmonica thinks of this especially since he seems to disagree with my idea....but I'm not sure since he hasn't made a clear reply yet.

<{POST_SNAPBACK}>

I believe your observation is correct - however THEIR prediction regarding GBP/USD was very vague, unlike the prediction regarding GBP/EUR.

[~G~]

Euro/Dollar .....  Euro/Pound  ....  Pound/Dollar

I have seen colossal mistakes made in the calls of an expert a couple years ago (don't recall the exact details) and it was due to a similar arithmetic reasoning.

Instead of doing things his way, I prefer to treat each pair as a completely separate entity and NOT try to extrapolate casually.

Each pair is unique.

OK.

Let's try by way of conradiction.

1. GBP/EUR drops by 40%.

2. USD/GBP stays the same.

3. As a consequence, USD/EUR does NOT drop by 40%. Let's say it only drops by 20%.

What does it mean?

It means that by changing GBP->USD->EUR->GBP you can actually make more money! or is it GBP->EUR->USD->GBP that will give the profit? I got all confused. Either way - the value of your money will climb/drop from these exchanges, regardless of comissions.

Edited July 18, 2005 by ~G~

[LivinLOS]

I make no comment on the prediction (dont hold any GBP now) but the statement is very simple..

GBP and USD conversion stay the same..

GBP falls 40%

Therefore USD falls 40% or the rates would not be 'staying the same'.. Simple basic logic in a free un manipulated market. Its cant work any other way..

[chownah]

I make no comment on the prediction (dont hold any GBP now) but the statement is very simple..

GBP and USD conversion stay the same..

GBP falls 40%

Therefore USD falls 40% or the rates would not be 'staying the same'.. Simple basic logic in a free un manipulated market.  Its cant work any other way..

<{POST_SNAPBACK}>

If the dollar dropped 40% relative to the euro wouldn't this shake international business and finance to the core and probably precipitate a shift from the dollar being the currency of international business to the euro holding that spot? It seems to me that the US dollar dropping 40% against the euro is the important consequence of the prediction...forget about what the pound....maybe the topic should be 'World wake up! Dollar to drop 40% against Euro ushering in new paradigm in world finance'. Would this (if it should come to pass which is a very big "if") be a global finance rattling development?

[TRIPxCORE]

Been reading though this thread with much interest as a currency investor myself. The only thing I know for sure is that USD is in a temporary upswing and will continue to trend downward. After all this malarcky is done about interest rate differentials and such, it always comes back to fundementals and the core fundemental problem in the US is that the twin dificits are hugh, continue to grow, and the US will have to keep attractiong foreign investment by creating incentives for the foreigners such as letting the USD falter some more.

After declining Friday, the Euro moved back up on speculation on a cut by the ECB has disappeared after inflation accelerated. The Euro is also getting support from expectations that the confidence reports due out tomorrow in Germany will show a nice gain. Government reports this month showed German factory orders gained and French industrial production increased in May from the previous month. The worst of the European data has been priced into the market, and the data should continue to improve helping to increase the upward pressure on the Euro.

About 60 percent of the 60 state economists in China believe their government should revalue its currency in the second half of this year. Most are advising their government to simply widen the trading band of the Renminbi whose value is currently held within .3% of the pegged rate of 8.265 Renminbi/US$. This meshes with last weeks reports in the Financial Times that China will revalue in August. It looks like the pressure to revalue is growing from within China as well as from their trading partners.

[Firefan]

Hi there!

Chownah; you are of course right - a drop of 40% would also mean a drop compared to the Euro.

Many clever heads (Bill Gross, Warren Buffet Etc.) agree with Tripxcore that the USD will continue to weaken towards most other currencies (I do not count the ones like the Yuan being linked directly to the USD).

While I find Harmonica's graphs interesting I have never put much faith in technical analysis be it for stocks, bonds or currencies - it is all history and all kinds of "head and shoulder" does not really convince me.

Personally I try to avoid speculating in currencies (which is even HARDER than stock as pride/politics Etc. is added into the economical equations even more than with stocks) by having my nest egg spread over multiple currencies (and asset classes Incl. gold/metals/commodities).

In a world market where EVERYBODY seems to want a weak currency (for export competativeness and reduction of deficits/loans tc.) it makes sense to put some of the capital in "real" stuff like commodities/metals Etc.

Cheers!

[ArtfulD]

You might want to look at GBP/AUD also....AUD has gotten stronger vs GBP and Eur over past few years and if your going to move your money into another currency doing so with one that gives better interest rates is nice. AUS rates are golden compared to Euro.

[TRIPxCORE]

More evidence that the USD will continue to weaken over the long-term---

Egypt Seeking to Increase Euro Holdings in Reserves, Finance Minister Says

July 18 (Bloomberg) -- Egypt wants to increase the amount of euros in its currency reserves, Finance Minister Yousef Boutros- Ghali said.

``Fifty percent of our trade is with the European Union, and so it makes sense to have something close to that,'' Boutros-Ghali said in an interview today.

``We would also like to match our debt,'' Boutros-Ghali said. ``About 40 percent of our external debt is euro or euro-based and non-dollar based.''

Dollars account for a majority of the world's foreign- exchange reserves, which are holdings of foreign currency by central banks. The dollar share was 63.8 percent at the end of 2003, down from 66.9 percent two years before, according to International Monetary Fund figures released in April last year.

Last week, the United Arab Emirates, the fourth-largest oil producer in the Middle East, said it may diversify its reserves and buy euros for the first time after the 12-nation currency slid against the dollar. The Emirates may switch as much as 5 percent of its holdings from dollars to euros, Sultan bin Nasser al- Suwaidi said in an interview.

Boutros-Ghali also said changes in the country's tax and customs codes has helped boost he country's benchmark CASE 30 Index of stocks traded on the Cairo and Alexandria Stock Exchanges. The index has almost doubled this year.

``We have changed the regulations,'' he said. ``We are retraining the staff. We're changing the way they operate and we're eliminating basically one of the main hindrances of foreign investment in Egypt. The market has seen the commitment. They see the seriousness and are reacting accordingly.''--------

I will never claim to be the smartest man in the world. With that in mind, with Bill Gross, Warren Buffet and George Soros diversifying out of USD, I think I will throw in my lot with them.

Edited July 18, 2005 by TRIPxCORE

[~G~]

...it always comes back to fundementals and the core fundemental problem in the US is that the twin dificits are hugh, continue to grow, and the US will have to keep attractiong foreign investment by creating incentives for the foreigners such as letting the USD falter some more....

Yes - the twin deficits. But - is the Euro alternative attractive enough?

It seems like banks and govenrments are required to choose between bad and worse.

[Harmonica]

OK chownah, I'll answer your question here -- we shall skip the explanation as it will be too tedious and tiresome to present!

Try not to get too caught up in these off-road excursions (necessary, but with caveats) for fear of missing the forest for the trees !

If Sterling drops 40% versus Euro

and Sterling versus Dollar is unchanged

then Dollar will drop 40% against Euro?

That is the question, right?

My answer is ...... buuuuuuuuuuuush*t!

Stated differently & unequivocally, wrong , wrong , wrong !

So once again it appears that I am the only one here who is of this opinion? ... Well then, let the games begin!

[~G~]

OK chownah, I'll answer your question here -- we shall skip the explanation as it will be too tedious and tiresome to present!

Try not to get too caught up in these off-road excursions (necessary, but with caveats) for fear of missing the forest for the trees !

If Sterling drops 40% versus Euro

and Sterling versus Dollar is unchanged

then Dollar will drop 40% against Euro?

That is the question, right?

My answer is ...... buuuuuuuuuuuush*t!    

Stated differently & unequivocally,  wrong , wrong , wrong !  

So once again it appears that I am the only one here who is of this opinion?  ...  Well then,  let the games begin!   

<{POST_SNAPBACK}>

It should fall approximately 40%. Why approximately? because changing currencies isn't free. it should be in the range of 39%-41%, or even tighter.

When I'll have more time I will prepare a numeric example that should (hopefully) prove that

Edited July 19, 2005 by ~G~

[Harmonica]

Hi there!

Chownah; you are of course right - a drop of 40% would also mean a drop compared to the Euro.

Many clever heads (Bill Gross, Warren Buffet Etc.) agree with Tripxcore that the USD will continue to weaken towards most other currencies  (I do not count the ones like the Yuan being linked directly to the USD).

Cheers!

These gentlemen are showing billions in losses due to their wrong bet on the Dollar . But they still mouth off incessantly -- but its easy to see that its just sour grapes and sourpusses -- they usually go hand in hand!

Bottomline: they got f*cked! Let's not forget that! The f*ckee always natters and complains about the &lt;deleted&gt;-er.

Will they get f*cked again?

Count on it! During the next major Dollar correction these fellows will come out again and blast the US economy with its trade deficit etc. etc., and they'll say, "see I told you so; the dollar's rise was transitory, fleeting, ephemeral etc., etc. -- then just as they get smug as bugs, the Dollar will blast off into the next trajectory and poy-manently silence them!

[The_Moog]

Harmonica, do please calm down a bit old chap, you're writing like Phineas T Barnum on acid and its not even lunchtime !

I took a look at the 'they' website. 'Investment and Business news' . I don't like the absence of byline (makes me think they nicked the stories), but they certainly present their facts quite well. I'd like to see their full newsletter.

[kreon]

Soros is a joke. How much did he spend on the last yank presidential election?

Sterling is solid as rock. Take it to the bank - euro is more likely to lose 40% than sterling, put your dosh there so called experts are full of sh*te!

<{POST_SNAPBACK}>

britmaveric,

No doubt that Soros is not liked -- in Thailand he would be lynched and even came close to it had he actually arrived last year!

But he is not to be underestimated businesswise -- he's pulled off quite a few stunning moves in the past.

But I'm more interested in what this special UK think tank is saying and er, thinking -- more importantly how deeply are they expecting this scenario?

I dug up some price charts for the Euro/GBP and they don't look worth a ###### to me in terms of accuracy -- I'm going to straighten out the data side sometime next week when I contact Reuters DataLink stateside.

40% is a whopper of a move and if there is any truth to it, man I have friends who could get caught on the wrong side of this.

Thanks for your input

<{POST_SNAPBACK}>

i really don't have time to participate in this discussion, but this i know...

In 1992 George Soros used Futures and Options trading to raid the British Pound. John Major who was the British Prime Minister, made an unsustainable commitment to the European ERM mechanism. Soros who is a super speculator spotted this and launched his attack. In a 4 hour period he made US$1B (One Billion) profit.

can he do it again.....who knows